Reading Tyler Cowen’s much-discussed piece ostensibly about exports for the American Interest, my thoughts turned to Peter Frase’s less-discussed “four futures” piece for Jacobin that I think deals with similar themes from a different perspective. The broad shape of the argument is that as accelerating technological change makes mass prosperity more and more of a possibility, all the economic returns accrue to rents.
In the Cowen framing, those rents are all essentially regulatory rents designed to prop up the privileged labor-market position of certain middle-class insiders with a particular focus on the health care and education sectors. Ryan Avent is also concerned with taxi drivers and hoteliers using regulation to block competition from Uber and AirBnB. I’ve often written about barbers. But the phenomenon of rents is much broader than labor market regulatory rents. The basic point comes down to us from David Ricardo, who really just had literal land rents in mind. Some of us have books out about that. Cowen notes that technological improvements in fossil-fuel extraction (fracking and horizontal drilling) will improve America’s export position, but the profits associated with these activities are really just another form of land rents. Meanwhile, if you want to get rich in the United States off regulatory rents, the real money is in IP rents rather than teacher licensing rules.
One problem in the emerging rentier economy is that employing human beings will still serve a kind of status role, especially as it becomes less and less strictly necessary to do so. Horses are no longer production inputs, but they’re still status symbols. At the same time, material plenty means that people who aren’t lucky enough to be enjoying rents will be less and less likely to work. We should expect increasing levels of Murray-style moral panic about working class “idleness” along with an increasing Ryan-style insistence that we “can’t afford” a welfare state despite having become a more prosperous society. As specific segments of the protected workforce are successfully appropriated, the stock of rentless workers will grow even as the well-being of the previously rentless workers rises due to further falls in the objective cost of living. The ideal outcome is that (perhaps after a social crisis à la the Bell Riots) everyone gets expropriated and we abolish private property in ideas and natural resources. Then by taxing pollution, land, congestion, and other externalities, we have adequate revenue to provide a decent social minimum for all, at which point people do what they like. Some people’s hobbies will align reasonably well with some kind of labor-market opportunity whereas others won’t, but society won’t be organized around a “work hard or else you’ll starve and be homeless” model because there will not objectively be a shortfall of food and houses or much of anything else.